Fubon Financial eyes opportunities in Southeast Asia

Fubon Financial Holding Co (富邦金控), the nation’s most profitable financial services provider, is eyeing acquisition opportunities in Southeast Asia to grow its scale after its banking arm hit its investment limits in China.

“We are shifting attention to Southeast Asia, in line with the Financial Supervisory Commission’s wish for a regional champion,” Fubon Financial president Vivien Hsu (許婉美) told an investors’ conference in Taipei.

The conglomerate has reached China’s investment quota for a banking business by owning an 80 percent stake in First Sino Bank (華一銀行) and a 20 percent stake in Xiamen City Commercial Bank (廈門商銀).

Fubon Financial may still tap the securities and non-life insurance markets in China, calling for a swift ratification by the legislature of the cross-strait service trade agreement.

“The ongoing stalemate is unfavorable to our investment and development in China,” Hsu said.

Under the pact, Taiwanese securities houses may join forces with Chinese partners in creating new brokerages in China where the Taiwanese firm may own up to a 51 percent stake.

Hsu described the recent investment of US$289 million (NT$8.84 billion) by Fubon Life Insurance Co (富邦人壽) in China’s Harbin Bank (哈爾濱銀行) as purely a capital investment.

While keen to expand in Southeast Asia, Fubon Financial is wary of the 40 percent cap on foreign investment.

“We really need to think about the restrictions,” Hsu said.

Fubon Financial is also cautious about buying life insurers in the region because most derive their income from investments rather than sales of insurance policies, she said.

The group does not have any plans to increase its capital this year as the cash it has on hand would suffice for its acquisition needs, she added.

Meanwhile, First Sino Bank, which owns 14 branches and sub-branches in first-tier Chinese cities, plans to broaden its reach to Taiwanese clients in China by adding three to five sub-branches this year in Shanghai and other areas, including one within the city’s free-trade zone, First Sino president Dennis Chan (詹文嶽) said.

Chan expected bad loan ratios at First Sino to continue climbing after rising to 0.86 percent in December from 0.28 percent a year earlier.

He also said housing prices in China's second- and third-tier cities are poised for corrections this year, driving lenders to tighten credit. Currently, mortgage lending accounts for 25 percent of First Sino’s loan books, he added.

On the local bourse yesterday, the financial sector was hit hard amid growing uncertainty over the cross-strait service trade agreement as students and activists continued to occupy the legislature in Taipei for the third consecutive day to protest the pact.